LAHORE - The erosion of Pakistani rupee against the US dollar continued in both the inter-bank and open markets, with the local currency declining to the lowest ever level of Rs125 versus a dollar after dropping by 50 paisas in a single day, dealers said.

Experts said that they can't reject the idea of further devaluation of the rupee in the coming days, saying it was difficult to say that how the national currency would perform in the near future.

With a fresh drop of 50 paisas on Wednesday, the rupee has now cumulatively depreciated by almost 16 percent to a record low of Rs125 against the US dollar during last six months due to growing imports and fast depleting foreign currency reserves. In the open market, the rupee fell by Re0.50 to all-time low of Rs125 against the greenback, currency dealers said.

Pakistan Forex Association president Malik Bostan said that the fall in inter-bank rupee rate triggered panic buying of dollars in the open market. Dealers were short of dollars as demand continued to surge and that situation would remain uncertain in coming days as well.

Experts said the objective of the depreciation was to revive sluggish exports and control surging imports, as Pakistan also needs an additional $5.4 billion to pay off its debt and make interest payments during next six months.